Diane BriseboisPresident and Chief Executive Officer, Retail Council of Canada

Good morning. Mr. Chair, members of the Standing Committee on Finance, we would like to thank you for inviting us to talk about the retail sector's concerns and recommendations regarding Bill C-38.

You have in front of you today a copy of the brief that was recently presented to the Standing Senate Committee on National Finance relating to the study on the potential reasons for price discrepancies in respect of certain goods between Canada and the United States, given the value of the Canadian dollar and the effect of cross border shopping on the Canadian economy.

Because we only have five minutes to present our comments and recommendations, I will get to the point immediately. I hope you will have time to carefully review our submission, which includes more details.

Of course, we will be very pleased to answer all of your questions after our presentation.

Our comments are timely considering that Bill C-38 will significantly change the personal exemption limits for Canadians bringing goods back into Canada, making it even harder for Canadian retailers to compete with their U.S. counterparts. We will focus on three significant areas that we believe need to be addressed by this committee. They include import duties on finished goods, supply management affecting prices of food products such as dairy and poultry, and regulatory harmonization. You'll also note that the submission before you speaks to vendor pricing, which is a matter we discussed at length with the Senate committee.

Let me quickly address import duties. One of the main areas where the federal government has a role to play in levelling the playing field for Canadian retailers and importers is in eliminating the outdated tariffs on finished goods entering into Canada. While Finance officials often note that these tariffs are only applied to 10% of all products entering Canada, they unfortunately are overly represented in the retail sector. For some retailers they represent close to 100% of the items they import into the country.

As an example, on page 9 of our submission, which we circulated

—it is on page 8 in the French—

we have listed the tariffs applied to sports equipment. For the most part, there are no duties applied in the United States for retailers importing those goods, yet the same products entering into Canada carry tariffs as high as 18%.

On page 10 of both the French and English versions of our brief, we provide another sample list of some of the tariffs we believe should be eliminated.

We thus urge the government to support the elimination of tariffs, as the minister had noted in the budget that he would be looking at this issue seriously.

The second matter relates to supply management, which we all agree is not always a very popular issue to discuss. One area that has not been discussed in full is the effect of the difference in pricing of dairy and poultry products between Canada and the United States. I draw your attention to page 12 of the report and the table that shows the difference in prices between both jurisdictions for supply managed food products. I think you will find it as shocking as we have.

While retailers fully respect and support Canada's agricultural community, we do know from our members that these products are the most popular products purchased by consumers during the great majority of the same-day cross-border shopping trips. In fact, dairy products, poultry, gas, alcohol, and cigarettes are the five top items that are brought in on same-day trips. There is a trend.

At the very least, should the current system continue to be sustained, the government must acknowledge its role in supporting marketing boards and higher prices in Canada for those popular grocery products. If the government wanted to provide retailers in Canada with a level playing field, it should have exempted or restricted these supply managed products from the personal exemption limits that have been increased by this bill, as it has done with tobacco and alcohol, and actively enforce those rules at the border.

The final point is regulatory harmonization. I would like to speak briefly about the need for better harmonization of regulations and policy.

Lack of harmonization and different standards and requirements contribute to increased prices of products in Canada and decreased productivity.

We applaud the government's creation of the Canada-U.S. Regulatory Cooperation Council. However, even after this was announced in February 2011, as our submission outlines, a new car seat testing regulation came into force, which was not at all harmonized with that of the United States.

Because of time, I will immediately conclude my remarks and thank the committee for its consideration of issues of concern to our sector.

I would like to thank the committee for inviting me today. There are two issues I would like to discuss. One relates to part 4, division 42, in the bill, regarding amendments affecting the federal contractors program, and the other is EI changes and what those will mean for women in B.C.

Division 42 of part 4 amends the Employment Equity Act to remove the requirements for employment equity that are specific to the federal contractors program. I imagine the committee has seen this, but just to remind you, what this sentence does is to say that the minister is responsible only for the administration of the federal contractors' employment. What it cuts out from the Employment Equity Act is the following:

and shall, in discharging that responsibility, ensure that the requirements of that Program with respect to the implementation of employment equity by contractors to whom the Program applies are equivalent to the requirements with respect to the implementation of employment equity by the employer under this Act.

This effectively does away with the requirements for contractors to meet employment equity standards when they work for the federal government.

The minister now has the latitude to establish any standard he or she would like, or none at all. This is really a huge blow to women in Canada and to other groups who are protected by human rights, including aboriginal people, visible minorities, and people with disabilities.

I had a complaint, along with six other women, about the unfairness of the Canadian research chairs in Canadian universities. It went to a human rights settlement, but it could do that only because of the contractors program. So it is incredibly important that this kind of program exist. Even what are usually good employers, like universities, will behave badly if they are not forced to meet employment equity standards.

The other issue I want to raise is employment insurance. This has received media attention primarily because of what it will mean for seasonal workers who are in largely male-dominated jobs. I want to point out what these changes will mean for women.

The structure of employment in Canada has changed considerably over the last 20 years, and full-time, full-year work is less common, particularly for women. Women predominate among the part-time, part-year workers, and these are the workers who are going to suffer from this.

According to the OECD, Canada has an absolutely dismal record of protecting workers, coming 29th out of 30 members, and now it will only get worse.

The issue is how women get to qualify for EI. Right now it's very difficult. In B.C. only 35% of the women who are unemployed qualify for employment insurance, and this is compared to a 38% average for women in Canada and a 42% average for men in B.C. Women in B.C. really do suffer because of the structure of their labour force participation.

I can give you an example from my own department in the university. It is part of a structure of employers to rely on part-time workers and temporary workers. These are people with PhDs. Sixty percent of the teaching in my department is done by people who are not full time and permanent.

These are the people we're going to be forcing to take lower incomes and to look for other kinds of jobs that will be unfair for them. There are all kinds of workers who do temporary and part-time work—hospital cleaners, home support workers, group home workers, legal secretaries, child and youth workers, and of course many who work in the tourism industries. Much of this work is skilled work, but the jobs are not necessarily high paying. Going from making $14 or $15 an hour to making $10.25, the minimum wage, makes a very huge difference for women.

We see that this legislation will contribute to a low-wage policy, and already the vast majority of low-wage workers are women, so these policies will affect them. I would like the committee to understand that.

You're probably aware that Campaign 2000 is a network of organizations representing low-income people, affordable housing, child care and health care providers, food banks, labour organizations, and women's groups. We've been tracking progress, or lack thereof, on child and family poverty for at least 20 years.

We were quite disappointed not to see measures addressing poverty or inequality in Bill C-38, and I guess we were jarred again by the recent report from UNICEF measuring child poverty in the world's richest countries, which reminds us that even among our peers, the economically advanced nations, Canada ranks 24th out of 25. UNICEF also emphasizes that poverty is one of the most costly mistakes a society can make—and it is indeed one that we can ameliorate.

The most recent statistics show that 639,000 children, or about one in 10, are still living in poverty. That doesn't well reflect the numbers in first nations communities, where it's closer to one in four. It's important to remember that about one in three of those children in poverty has a parent already working full time. So the issues we've been talking about with regard to labour market and labour replacement income under EI are relevant to poverty reduction.

UNICEF also confirmed that public policies in the form of taxes and transfers make a big difference, which is why we had wanted to see some progress on that. Of course, in Canada we have strong evidence in the progress we've made to date, both from our programs assisting seniors—OAS, GIS—as well as with children. I don't know if you have in front of you a copy of the report card that was sent, but we have a good chart where we show the impact of taxes and transfers, including employment insurance, the Canada child tax benefit, the national child benefit supplement, and the GST credit. Before those were taken into account, we would have had 25% of children, one in four, in poverty, and after those taxes and transfers, the rate went down to 14%, preventing about 770,000 children from living in poverty.

The other important point is that the CCTB and the NCB address both poverty and inequality. The maximum benefit goes to families with net incomes under $24,000, but the progressive nature of the benefit trails out so that almost 90% of children receive something. Obviously, in families with more income they receive less.

So what we are suggesting is that to both prevent and strengthen child and family poverty we need to retain, if not enhance, those existing taxes and transfer measures, including EI, the national child benefit. I think we need a more updated look at the GST credit—or now we'd call it the HST credit in many places—and we need to focus on creating better jobs. Specifically, the child benefit needs to be increased to a maximum of $5,400, and even at that, our lone-parent mother would need to earn at least $12 an hour for at least 34 hours a week, plus the child benefit, to bring herself and her child out of poverty.

We believe that poverty reduction and eventual eradication is a key part of a prosperity agenda. Remember, these funds in families on tight incomes are all spent in local communities. They're not sent abroad. Unfortunately, people aren't able to save, but they desperately need that money for food and rent. So this direction will address some critical needs of our most vulnerable Canadians and will reduce intractable social and economic problems for years immediately ahead and to come.

Once again, we have a wealth of expertise here in a lot of very important areas. I think I'm going to spend most of my time with Mr. Stanford.

Regularly, sir, we hear the government members here and in the House talk about net jobs—700,000 net jobs—and on face value it sounds really good. The materials you brought before us today counter that argument. Very clearly, you're saying that the jobs that have been created, first of all, are not necessarily that good, and there's a certain discounting that's been done with the number of people who have lost their jobs.

I wouldn't dispute the empirical accuracy of the claim that net new jobs have been created and net new jobs are an important variable to follow. The question is, how do you appropriately interpret that measure? In a country like Canada, whose population is growing relatively quickly...we have one of the fastest rates of population growth in the industrialized world. Our labour force, or working-age population, grows by between 1.3% and 1.5% per year.

We have to be creating hundreds of thousands of net new jobs year after year just to keep up with that normal course of population growth. It's particularly important when you're making international comparisons. Think of a country like Germany, which has virtually no population growth. Canada has created net new jobs; Germany hasn't. But Canada has to create hundreds of thousands to keep up with population growth; Germany doesn't.

By a more appropriate measure, which is the number of jobs relative to the size of the working-age population, Germany's labour market has been much stronger than Canada's through the recession and the subsequent recovery. Their employment rate is actually higher than it was before the recession, whereas the graph I showed you shows that Canada's is still substantially lower than before the recession.

There is also an issue about the quality of jobs that is not captured either in the net new job measure or, frankly, in my graph. My graph just asks whether you're working or not. There has been some growth in part-time work and precarious work through that period. But I think the bigger issue is the context in which you interpret a statement like the number of net new jobs. Canada's labour market relative to our population is still far weaker, near the worst conditions at the bottom of the recession.

One of the things that happened at our pre-budget hearings is we had a number of people talking to us about a figure that was thrown out. It was $500 billion of business capital that was sitting. Nothing was happening. Part of the pre-budget was whether we're going to have an austere budget or whether we're going to have an investment budget. With the bond rates as low as they are, would this not have been a good time for this government to use their borrowing power to start addressing the Federation of Canadian Municipalities' deficit in infrastructure, which is around $122 billion?

You mentioned the issue of cash and other short-term financial assets not being mobilized within the business community. I do think that is an important problem. Think of the economy as having four major players in it, if you like, who have to be spending, and in general borrowing and spending, in order to propel the economy forward and create jobs: consumers, government, foreigners—in the sense of our net exports—and then the business community.

Consumers and governments have both gone deeply into debt during the recession, and are concerned about the debt and are looking at curtailing their expenses. Our net exports to the rest of the world have declined significantly, partly because of economic weakness in the rest of the world, partly because of our overvalued exchange rate.

That means we're very dependent right now on business opening the taps of capital spending in order to balance out our recovery. As yet that hasn't really happened. In fact, business investment spending is still the only source of domestic spending in our economy that is lower in real terms than it was before the recession.

So I'm in favour of measures to try to stimulate more investment spending, both by businesses and by the public sector, and there are very important investment infrastructure programs that the government can and should be taking on in part to address the downturn in employment that I documented.

I'd love to ask you several questions about OAS. I can't do it. I'm just about out of time.

There's been a particular interest by some government members in the operations of unions. The CAW, when they have their convention, puts a financial document before their members that shows their operating budget. Is that correct?

Yes, we release audited financial statements twice yearly. Those statements are public. In fact, in most jurisdictions we're required to file them with the labour board. So there's no issue about the transparency or public nature of our financial statements.

Thank you, Mr. Chair, and I'd also like to thank the witnesses for coming and appearing on this very important budget.

I'd like to start with Ms. Rothman. Certainly child poverty is a concern. I think it's got to be a concern to everyone. I know that in regard to affordable housing, for example, with the economic action plan we actually managed to double housing throughout my riding. I think we have made significant strides, but I would never feel that the job is done for sure.

Could you help me in terms of Canada's numbers, because I think Canada does have some unique challenges in terms of rural, remote, urban? Does the study actually break things down at all in terms of where those challenges are?